Reuters tunes up

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The name is synonymous with breaking news stories around the
globe. The recent war in Iraq, for example, saw footage from its
journalists on televisions nightly. But in recent times, Reuters
itself has been making the headlines, and they havent been
pretty.

Escalating lay-offs and tumbling share prices have heralded a
company-wide call to action. In corporate speak, Reuters has
developed its "Fast Forward" program to steer the ship back to
calmer waters; in real terms, the organisation is cutting back
product lines and adopting a simpler and cheaper way of doing
business.

Like those of many organisations, the companys
difficulties stem from forces beyond its control. The struggling
investment banking industry-Reuters main customer for its
core business of selling financial data-has been cutting all
possible expenses, often including Reuters subscriptions. This has
prompted the company to look inwards and assess what it can do
better.

The Fast Forward plan is based around five interdependent
strands (see box on page 54) and is targetted at annual cost
savings of US$811 million by the end of 2005, with expected
restructuring charges of US$627 million.

IT takes a stand Global CIO Greg Meekings told MIS Australia his
department is supporting each strand, although his influence will
be felt more heavily in some areas than others. Meekings role
covers Reuters internal process support administration, while
the companys single product delivery system is in the hands
of CTO Mike Sayers.

"The themes that really underpin the Fast Forward initiative are
based around our order administration and support systems, which
will radically change. We aim to achieve the necessary efficiencies
internally by means other than just reductions," says Meekings.

Reuters faces a problem common to large, diverse companies: too
many different systems doing similar jobs. All areas of
administration, ranging from product and order checking to billing,
have literally dozens of alternative systems in use in different
offices. The CIO says the intention is to settle on a simple
process that can be used globally.

"We decided that we are going to buy, not build, and if we are
going to buy, then we have to leverage what we have bought," says
Meekings. "We will simplify the product line to make it both easier
to administer and easier for customers to understand. It will also
become something we can fit within a standard model, so the bespoke
work we need to do is kept to an absolute minimum."

Global Rationalisation
Meekings accepts that a program of global rationalisation will face
resistance from those comfortable with a long-standing and often
self-developed method of working. But he points out there is
nothing like a crisis to grease the wheels for change.

It is far more difficult to convince people to do things
differently in an organisation that is growing at 20 per cent a
year and raking in profits, he says, than it is in a consolidating
environment where staff are aware of the shrinking marketplace.

Alongside a general willingness among staff to take on new
ideas, Meekings says he has needed to adopt a firm leadership
position. No matter how understanding employees may be to the
external pressures on senior management, the reality of any
organisation is that some people will dig their heels in and
contest corporate strategy.

The CIO recalls that when he assumed his role, he found his team
was doing so much bespoke work around the edges of Siebel that it
left them powerless to institute upgrades.

"We couldnt upgrade to the subsequent versions when we
wanted to because it would break all these other things," he
says.

Meekings decided that when his team rolled out the next release
of Siebel, it would not ask internal customers for their individual
requirements.

Instead, employees were enrolled on Siebel business process
courses, taught what had been bought, and then asked how they could
run their business using it. Whenever members of the IT team found
something they needed to do but couldnt, Meekings insisted on
personally signing off the development.

"This created a lot of tension in the organisation," says
Meekings. "But interestingly enough, having worked through it,
weve since reduced the amount of bespoke code by about 70 per
cent. People are starting to realise that there is a much better
way of working than the situation they used to believe in."

Fast Forward is designated as a three-year progression, with the
first phase of the order fulfilment process upgrade expected to
last 12 months.

The trauma of shutting down the legacy systems will be lessened
by the companys decision to outsource their support to India,
so that Reuters employees manage few of the systems being
closed.

The Fast Forward program will also result in Reuters shifting 50
percent of its data operations to India by the end of 2005,
employing a further 860 workers, group editor-in-chief Geert
Linnebank reportedly told a recent press conference in
Bangalore.

Meekings also reportedly told a CIO summit held by The Economist
in June that the company had decided to switch 15,000 servers from
IBM to HP as part of Reuters effort to standardise and
simplify business processes.

Leadership leeway While aware of the importance of strong
leadership in changing times, Meekings concedes genuine sensitivity
to peoples concerns is an important aspect of the CIOs
role.

The CIO says it is important to focus on the positives and offer
silver linings when staff members feel they are being mistreated or
shunted aside.

Explaining decisions up front is also crucial: when a group of
about 40 systems workers were told the bespoke Siebel work they had
been responsible for would no longer be required as part of the
Fast Forward streamlining, he immediately outlined the areas where
their skills would be re-deployed, rather than leaving them to
contemplate alternative possibilities.

However, as one of the publicised aims of the Fast Forward
program is to cut down on overheads by reducing staff from 16,000
to 13,000, Reuters employees worldwide are well aware of the
possibility of redundancy.

John Murphy, the Sydney-based head of Reuters IT services Asia
Pacific, says because the program is essentially about doing more
with less, the Asia Pacific operation is likely to shrink as
well.

Meekings insists that honesty is essential if staff is to remain
motivated with talk of layoffs in the air.

"We want to have an environment where people dont feel
there are secret plans being hatched that they dont know
about," he says.

"We try to move as fast as we can in terms of being clear to
everyone who may or may not be involved," he adds. "The people
affected can then become involved in the process to a certain
degree. I guess at the end of the day you just keep focusing on the
good news that there will still be 13,000 people in a vibrant
company that will be an exciting place to work."

State of shock
Reuters recently carried out a sample of staff engagement to assess
the perception of the changes. Meekings says it indicated a sense
of shock at the state of the marketplace, but also an acceptance
that Reuters is doing everything it can to cope with a volatile
environment.

The CIOs department will contribute to the drive towards
greater internal efficiency by implementing a self-service human
resources model. While areas like expense claims, employee records
and appraisals were previously manual processes, new internal
systems such as an electronic purchasing hub aim to take excess
manpower out of the equation.

The department is also looking at improving the manner in which
employees intellectual property is preserved and disseminated
internally, Meekings says.

"This is important both because there are less of us and because
people are moving on. It requires a combination of putting up a
number of fairly simple Web services and encouraging people to take
credit for sharing information rather than thinking they are better
off keeping it to themselves. We have to remove the notion
internally that this knowledge is power."

Cultural shiftIt is always a danger for senior management to
become so embroiled in the rhetoric of a new initiative that they
assume their staff is also on board. But Murphy says there is a
genuine acceptance in Reuters that the Fast Forward process is
needed to better focus the company on customer needs.

"Its a cultural change in the organization," he says.
"Fast Forward means we have to be quicker to resolve problems and
to come up with new products both internally and externally.

"Its about changing the pace of change. We knew we needed
to remove the bureaucracy, and that is what Fast Forward is trying
to do."

Five fast forward strands
Invest in new content to enhance Reuters product lines Move
to a single product delivery system to cut down on costs and
improve service. Optimise product segmentation by selling fewer but
more tailored products to increase revenues. Focus Reuters
solutions business on its core strengths of risk management,
content management and treasury products. Reshape Reuters
cost base to make it smaller and more scalable.